In re Acoje Mining Co., Inc.

December 5, 2008 SEC CASE NO. 02-07-167 IN THE MATTER OF ACOJE MINING COMPANY, INC. MINIMAX MINERAL EXPLORATION CORPORATION , petitioner . FOR : Petition for Calling of Meeting under Section 50 of Corporation C od e O R D E R For consideration is the Petition dated January 31, 2007 for Calling of Meeting of Acoje Mining Company, Inc. (Acoje) under Section 50 of the Corporation Code filed by petitioner Minimax Mineral Exploration Corporation (Minimax), a stockholder of the corporation, requesting the Commission to direct it, through its authorized representative, to call and preside over a special stockholders' meeting of Acoje. HEDCAS Acoje is a domestic stock corporation incorporated on October 14, 1935 with an initial corporate term of 50 years. In November 1984, the Commission approved its application to amend its Articles of Incorporation extending its corporate term for another fifty (50) years from October 14, 1985 to October 14, 2035. Its primary purpose is to carry on the business of mining, milling, concentrating, converting, smelting, treating, preparing for market, manufacturing, buying, selling, exchanging, and otherwise producing and dealing in chromite and other materials. Based on its financial statement submitted on Oct. 29, 1997, its principal office is located at Room 407 J&T Bldg., R. Magsaysay Blvd., Sta. Mesa, Manila. Petitioner alleges that sometime in 1997, Acoje ceased to operate its business. 1 Since then, it has also failed to conduct any annual stockholders' meeting. Neither did it submit its reportorial requirements to the Commission. Petitioner further alleges that on September 27, 2006 it served on Acoje through its President, Mr. Modesto B. Bermudez, a letter 2 dated September 27, 2006 requesting for a special stockholders' meeting on October 17, 2006 pursuant to its right under Section 2, Article I of Acoje's By-Laws as holder of 83% of the outstanding capital stock of Acoje. Said provision states: Section 2. Special meetings of the stockholders may be called by the President, or by order of the Board of Directors, whenever he or they shall deem it necessary, and it shall be the duty of the President to order and call such special meetings whenever the holders of record of not less than one-fourth of the outstanding capital stock of the Company shall in writing so request. 3 The request to the President went unheeded. Thus, this petition. In its Order dated February 28, 2007, the Commission directed the Board of Directors of Acoje to file its Answer/Comment within 15 days. The Order was returned to the Commission unserved for the reason that Acoje no longer holds office at the specified address. 4 In a motion dated July 20, 2007 the petitioner prayed that summons be served by publication. On November 29, 2007 the Commission ordered that summons on Acoje together with a copy of the Petition be served by way of publication. On December 27, 2007, the Publication Order, the Order dated February 28, 2007 directing Acoje to file its answer, and the Petition were published in Malaya , a newspaper of general circulation. 5 To this date, no Answer/Comment was filed by Acoje with the Commission. DCcHIS Pursuant to Section 3-12 of the 2006 Rules of Procedure of the Securities and Exchange Commission, Acoje, as Respondent, is hereby declared as in default. Generally, the petitioner is entitled to the reliefs prayed for without need of adducing additional evidence, unless so required by the Commission. Section 3-12 of the Rules of Procedure directs the Commission to render judgment granting such relief as the complaint may warrant. 6 But it should be noted that the relief prayed for cannot be granted unless petitioner is able to show good cause of its right to such relief and this holds true even if defendant is in default. Petitioner invokes Section 50 of the Corporation Code which states in part: Whenever, for any cause, there is no person authorized to call a meeting , the Securities and Exchange Commission, upon petition of a stockholder or member on a showing of good cause therefor, may issue an order to the petitioning stockholder or member directing him to call a meeting of the corporation by giving proper notice required by this Code or by the by-laws. The petitioning stockholder or member shall preside thereat until at least a majority of the stockholders or members present have chosen one of their number as presiding officer. (emphasis supplied) For Section 50 to apply, two facts need to be alleged and proven: a) That there is no person authorized to call a meeting, for any cause; and b) Upon showing of a good cause. Petitioner, through the pleading and motions submitted, has shown good cause for invoking Section 50. For instance, petitioner has shown that Acoje's mining claim in Zambales is in danger of being usurped by another company. 7 In short, petitioner aims to protect its pecuniary interest in Acoje which the Commission finds to be good cause for calling a meeting. What the Petition lacks is a showing that there is no person authorized to call a meeting. Under its By-Laws, the President of Acoje is one of those authorized to call a meeting. But in its Petition, Petitioner merely states that the President has refused to heed its request for a special meeting pursuant to Acoje's By-Laws and that the principal office of Acoje has been abandoned. By petitioner's own words, petitioner was only informed that the President is currently out of the country at that time when the request was served. 8 caIEAD Also, there is no allegation that the Board of Directors is no longer available to conduct a special meeting. In fact, Petitioner alleged that it continued to furnish copies of pleadings and motions to the members of the Board including the Corporate Secretary as shown by page 11 of the Petition 9 and a Written Explanation and Affidavit of Service attached to a Manifestation filed with the Commission on May 8, 2007. 10 Section 2 of Acoje's By-Laws clearly authorizes the Board of Directors to call a meeting concurrently with the President. 11 The act of abandoning the principal office cannot be construed to mean that there is no longer any person authorized to call a regular or special meeting. In any case, Petitioner seems to be informed of the whereabouts of at least one of the other members of the board of the directors. The Corporate Secretary, Mr. Gil Marvilla, who was also a director, 12 was able to receive the letter calling for a special meeting. 13 Petitioner, in support of its Petition, cites the case of Frianeza . 14 Upon a review of the case, the Commission finds that the case is not applicable to the one at hand. In Frianeza , the election of the Board of Trustees was declared null and void by the Commission. Therefore, there was truly no one to call a meeting. However, considering that upon proper verification made, it appear that no stockholders' meeting has been held by Acoje since 1997 without any justifiable cause, it is clear and indubitable that the calling of an annual meeting and election of the board of directors and officers of Acoje is in order. This is in line with the power of the Commission under the Securities Regulation Code, particularly Section 5.1 paragraphs (a) and (k) to wit: "Section 5. Powers and Functions of the Commission. 5.1 The Commission shall act with transparency and shall have the powers and functions provided by this Code, Presidential Decree 902-A, the Corporation Code, the Investment House Law, the Financing Act, and other existing laws. Pursuant thereto, the Commission shall have the following powers and functions: (a) Have jurisdiction and supervision over all corporations, partnerships, or associations who are the grantees of primary franchises and/or a license or permit issued by the Government. xxx xxx xxx (k) Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision. SDcITH WHEREFORE, premises considered, the instant petition is hereby GRANTED. Petitioner Minimax, Mineral Exploration Corporation, through its duly authorized representative, is hereby ordered to call a stockholders' meeting of Acoje Mining Company, Inc. for the purpose of electing the directors and officers of the corporation within 30 days from receipt of this order. The representative is authorized to preside at such meeting. The Corporate Secretary of Acoje is likewise ordered to send notices of the stockholders' meeting at least ten days prior to the proposed date of the meeting as provided for in Article I, Section 4 of the By-Laws of Acoje. 15 He/She shall make available the stock and transfer book for inspection by any stockholder of the corporation during reasonable hours on business days. Upon request, any stockholder shall be furnished a certified list of stockholders at his/her expense. The parties are hereby directed to create a Committee on Elections (COMELEC), to be composed of one (1) representative of the petitioner, one (1) representative of the respondent and one (1) neutral party mutually selected by both the petitioner and the respondent who shall serve as the Chairperson. The COMELEC shall administer and supervise the conduct of the election. Lastly, the parties are ordered to: (1) submit to this Office the names of the persons chosen to be members of the COMELEC not later than ten (10) days from receipt of this Order; (2) submit the General Information sheet (GIS) for the current year to the Company Registration and Monitoring Department (CRMD) of this Commission within thirty (30) days from the holding of said meeting and election; and (3) adopt the necessary measures to ensure a free, honest, clean and orderly election. Let a copy of this Order be furnished the CRMD for its appropriate action. SO ORDERED. Mandaluyong City, December 5, 2008. (SGD.) VERNETTE G. UMALI-PACO General Counsel Footnotes 1. Page 4 of Petition. TAacHE 2. Annex R of the Petition. 3. Page 6 of Petition. 4. SEC Order dated November 29, 2007. 5. Annex A of Manifestation and Motion filed on February 20, 2008. 6. Section 3-12 of the 2006 Revised Rules of Procedure states in full: Effect of Failure to Answer If the respondent fails to answer the complaint within the abovestated period, he shall be considered as in default. The Hearing Panel or Officer shall, motu proprio , proceed to render judgment granting the complainant such relief as the complaint may warrant, unless the Hearing Panel or Officer determines that the complainant should be required to ex parte additional evidence. 7. Annex B of Manifestation filed on May 8, 2007. 8. Page 7 of Petition. 9. Registry Receipt Nos. 4354, 4355, 4356, 4357, 4358, and 4359 are stapled to said page of the Petition beside the names and addresses of directors of the Board of Acoje. 10. Registry Receipt Nos. 13258, 13259, 13260, 13261, 13262, and 13263 are stapled to said document which is attached to the Manifestation filed on May 8, 2007. 11. Section 2. Special meetings of the stockholders may be called by the President, or by order of the Board of Directors, whenever he or they shall deem it necessary, and it shall be the duty of the President to order and call such special meetings whenever the holders of record of not less than one-fourth of the outstanding capital stock of the Company shall in writing so request. 12. Latest available General Information Sheet attached as Annex C of the Petition. 13. Letter served on and received by Mr. Marvilla attached as Annex Q of the Petition. CHEIcS 14. SEC Case No. 12-95-5217, May 16, 1996. Attached to the Manifestation filed on May 8, 2007 as Annex S. 15. Section 4. Notice of the time and place of holding any annual meeting, or any special meeting, of the stockholders, shall be given either by posting the same enclosed in a postage prepaid envelope, addressed to such stockholder of record, at the address left by such stockholder with the Secretary of the Company, or at his last known post-office address, or by delivering the same to him in person at least ten days before the date set for such meeting. . . . Published in The Manila Times on April 3, 2009.